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Message Boards Digest

September 10, 2020

Here are the most recently added topics on the BenefitsLink Message Boards:

Pammie57 created a topic in 401(k) Plans

Individual Has Wages from One Participating Employer But Self-Employment Losses from Another Participating Employer

"An employee of a 401(k) plan sponsor gets a W-2 and defers on those wages. He's also a partner in a partnership, which is a participating employer. He ends up with a large net loss for self-employment purposes. Do I need to net the two income sources, which would result in him having no 'compensation' for purposes of the plan?"

0 replies   |    19 views   |    Add Reply
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ConnieStorer created a topic in Defined Benefit Plans, Including Cash Balance

Overfunded Defined Benefit Plan -- Merge with Unrelated Company Having an Underfunded Plan?

"Does anyone have the name of a company that could help facilitate the merger of an overfunded sole proprietor plan with an unrelated company that has an underfunded plan? Thanks for any suggestions. We cannot increase benefits for this sole prop and he has no employees that can be added to the Plan. He really wants to avoid the huge tax liability with a reversion."

2 replies   |    49 views   |    Add Reply

Santo Gold created a topic in Correction of Plan Defects

VCP Filing for Incorrect Match

"A match formula was not applied correctly and all participants were short on receiving their match for the 2017 plan year. It's now 2020 so we are past the 2-year window and we are considering the errors to be significant. Is it correct that the employer should deposit the missing contributions plus an earnings amount as soon as possible or should the VCP be filed and wait to hear from the IRS before taking any corrective action?"

1 reply   |    34 views   |    Add Reply

Molgilny89 created a topic in 401(k) Plans

Inadvertent Error on 404(a)(5) Notice

"404(a)(5) notices went out to participants within the 30/90 day window prior to first investments. Unfortunately, the notices inadvertently included two investments that were not actually available to participants. If we send out corrected notices, does the the 30-day clock restart? Or can we simply send out a corrected notice and still utilize the original 30-day window? Could this possibly qualify for the unforeseen circumstances exception that is provided for in 404(a)(5)? (I've heard this is interpreted very narrowly by the DOL.) The regs appear to address this type of good faith error from a 408(b)(2) perspective but not a 404(a)(5) perspective."

1 reply   |    37 views   |    Add Reply

cathyw created a topic in Plan Terminations

Terminated PBGC-Covered Cash Balance Plan Unresponsive Participant

"A PBGC-covered cash balance plan terminated. Two participants who had terminated employment years ago, have not responded to the distribution election forms. The mail was delivered, and a commercial locator service confirms the last known addresses. One participant did respond to the plan administrator's attempts to connect by phone and email, indicating he would complete and return the forms but still has failed to do so several weeks later despite repeated reminders. The other participant could not be contacted through email, LinkedIn, Facebook, etc.

Both participants have cash balance accounts of approximately $10,000 each. Neither participant is at normal retirement age. Working with an annuity broker, we were told that they could not find a carrier that is willing to accept a liability of this nature.

Can these funds be transferred to PBGC under the Missing Person Program? I don't think the participants technically qualify as 'missing', but they are both unresponsive. If the plan can't purchase the annuities, what other option is there?"

1 reply   |    19 views   |    Add Reply

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